New Tax Deferred Savings Plan

Indiana University is pleased to announce the establishment of the IU Retirement Savings Plan, effective September 1, 2003–an additional opportunity for employees to accumulate retirement savings with tax deferred contributions and investment earnings.

The IU Retirement Savings Plan will take advantage of IRC Section 457(b) deferred compensation provisions, allowing employees to voluntarily contribute to a retirement account by “deferring” a portion of their salary on a before-tax basis. General provisions of the IU Retirement Savings Plan include:

• Salary “deferral” contributions are processed through payroll on a before-tax
  basis, subject to IRS annual limits. (For 2003, the limit is $12,000 plus another
  $2,000 for participants who are age 50 or above.)
• Federal and Indiana income taxes on contributions and associated earnings
  are deferred until funds are withdrawn from the participant’s retirement
  account.
• Withdrawal of any portion of account accumulations is only allowed upon
  termination from the university.
• Investment fund options include TIAA-CREF Investment Solutions and Fidelity Investments.

Eligible employees may enroll in either or both the IU Retirement Savings Plan and the IU TDA Plan. While these two plans are similar, there are a couple of meaningful differences in withdrawals. Under the IU TDA Plan, an IRC Section 403(b) plan, employees may not withdraw any portion of their account accumulations under age 59 1/2. (Former employees may withdraw any portion of their account accumulations at any age, with an IRS penalty of 10 percent for withdrawals after age 59 1/2.) Under the IU Retirement Savings Plan, only terminated employees may withdraw account accumulations, regardless of age. (There is no IRS penalty for withdrawals at any age.)

To enroll in the IU Retirement Savings Plan employees must take two steps:

1. complete a Salary Deferral Agreement form and
2. complete a 457(b) Account Application form for TIAA-CREF or Fidelity Investments.

These forms may be obtained by contacting University Human Resource Services or a campus HR office. Additional information is available at www.indiana.edu/~uhrs/benefits/457b.html

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Retirees Under Age 65 -- More Affordable Health Care

Effective January 2004, Retirees who are under age 65 (not eligible for Medicare) will have the option of enrolling in two IU-sponsored self-funded PPO medical plans: IU PPO $900 Deductible and IU PPO-Plus. Medical premiums for these Retirees will be the same as COBRA participants for the respective plan, which are based on the premiums for the active employee pool.

These Retirees will benefit from this new provision as follows:

• There will be a choice of two medical plans.
• Medical plan coverages will be expanded.
• Premiums will be the same as COBRA participants.

Additional details will be available at the time of retirement from the university.

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